Car insurance: Premiums jump for drivers and 'will keep on rising'
Published 15/05/2015 | 02:30
The cost of motor insurance shot up by 16pc in the past year, new figures show.
And drivers were warned that premium rates would keep rising this year.
Insurers have been pumping up the price of premiums after a price war left them making losses.
And the main domestic insurer FBD saw its shares fall by 9pc on the Irish Stock Exchange yesterday after it warned investors that the insurance market "remains challenging".
The double-digit rise in motor premiums in April emerged in new inflation figures from the Central Statistics Office. In contrast, general prices were down 0.7pc in the month.
Motor premiums rose by 2pc in the month of April, but rates are now up 16pc for motor compared with a year ago.
This means that a premium that cost €500 a year ago will have gone up by €80.
Some motorists are being sent renewal notices with increases of 25pc or more. Younger drivers are being hardest hit by the higher cost of getting cover.
Insurers have been hiking premiums for months now after a failed price-war led by RSA Ireland and its online operation 123.ie meant they sold policies too cheaply, and did not put sufficient reserves aside to cover claims.
FBD said yesterday it was cancelling its dividend to shareholders. Its share price fell sharply after it said it had lower premium income in the first three months of this year.
Conor Faughnan of AA Ireland warned drivers to expect premiums increases of up to 20pc this year.
He said more traffic on the roads mean more collisions.
The cost of settling claims was also rising due to more people using lawyers to make claims.
But he said premiums were rising and were due to keep rising because insurers had under-priced for the last few years and failed to put sufficient reserves in place.
"Part of the reason premiums will keep rising this year is because in the past they were too low and there is also concern about low levels of reserves," Mr Faughnan said.
AA Ireland acts as an insurance broker and has around 170,000 drivers on its books.
Meanwhile, the CSO figures show that rents also rose in April, but overall prices were down.
Rents shot up by close to 9pc in the year to April, as a chronic lack of supply in many areas has pushed up the cost of renting.